The United States Government could create a coin that would dwarf Bitcoin. This could be done in such a way that it would be the leader in cryptocurrency.
What we are referring it not a Central Bank Digital Currency. Instead, we are focusing upon a value capture token that could serve as the foundation for the entire economy. It might be something that actually spread throughout the world.
So what is this incredible crypto?
For this article, let's call it USACoin.
USACoin: The Most Valuable Cryptocurrency
If USACoin wanted to be effective, it would have to be structured properly. This is why we are dealing with a hypothetical situation (fantasy) since we know governments never willing give up control.
That said, the first criteria is to have this housed on a public blockchain. This would be something that was decentralized, not allowing for any institution, including the government to take control.
A second component is this coin is not a medium of exchange. Price stability is not something desired. There are a mixture of coins and tokens emerging that can fill that role.
We are dealing with value capture.
The US economy was an estimated $25.7 trillion at the end of 2023. This is something that USACoin could leverage.
Universal Basic Asset (UBA)
We see a lot of talk about Universal Basic Income (UBI). This is obviously something that comes with great debate. The challenge is that we are dealing with the government in the middle of everything.
Perhaps going with a value capture asset is different. Instead of passing out money in the form of income, we start to focus upon distributing an asset. That is the power of tokenization. The distribution is the same, with the meaning changing.
A lot of thought would be required as to how to distribute it. What are the criteria and how it is earned? Since the US Government is already doing a ton of transfer payments, this is something that could be done with a token.
Of course, there would have to be other mechanisms added. Nevertheless, whatever the criteria, there is a consistent allocation.
This is the first step.
What comes where the economic added activity can happen. The token not only has the ability to be bought and sold; it can also be used as collateral.
Here is where the circular nature of things starts to take off.
While the distribution gets it into the hands of individuals, the collateralization is what will interest companies, especially financial institutions.
Due to the sheer size of the market cap (over time), we can see how volatility will be lower than smaller assets. Once that happens, we have something that is able to be used to drive economic productivity through the financing of operations.
For example, this was completely transform the mortgage market. While many would still use the house as the asset, as people accumulated more wealth, they could simply use that as collateral via USACoin. That is the asset at risk, not the property.
There would likely still need a layer that focuses upon the price stability of the asset. Nevertheless, there are many ways to approach this.
Funding Mechanism
The challenge with the monetary policy of central banks is they essentially focus upon spending. Their goal, at times, is to try and entire the public to spend more money. After all, we hear over and over how important it is to grow the economy.
Once again, this is short term thinking which only favors a few long-term.
When people spend money, the numbers see a boost for a quarter or two. The individuals have a bunch of stuff, most of which they probably didn't need to begin with. The corporations see their earnings go up which makes the shareholders happy.
Of course, there is nothing lasting about this. While the economy might start to take off as they "primed the pump", that is more luck than anything else. The business cycle is really not concerned with the central banks or the pumps.
The alternative approach is to stimulate funding. Here is where investment is made into the economy. As individuals or businesses engage in the loan process, economic activity results. When this is directed into areas where output results, we see a net positive on the economy.
Economists like to refer to the money multipliers. There is nothing of greater impact than an investment that leads to positive economic activity.
Capturing Technology Value
One of the major topics of conversation is the advancement of technology and the effects that will have.
While this will not answer all the questions, it does put a floor on the potential of job elimination. Since income capital could contract (if not mostly vanish), we need to consider a different possibility.
Here is where USACoin becomes a mechanism to solve this.
Technological advancement is one of the main drivers of economic growth. Since population growth is not going to provide the boost for much longer, we have to focus upon innovation.
This does not seem to be much of a problem since a lot of entities, including the government are working upon this.
Where we encounter a challenge is with the distribution of the financial benefits. We saw how things unfolded over the last 30 years with the Internet. What is going to change?
With something like USACoin, we can establish feeder systems. This means having different revenue streams established based upon technological development. For example, is "tax the robots" the solution? If so, do that and have the money distributed directly to the wallets of the token holders.
Suddenly, we have a "dividend" of sorts.
There would also likely be some form of parallel between GDP growth and the value of the token. While markets operate on their own, over the long term, the trend would probably follow.
So if we see the GDP growing at 3% per year, we could expect a similar move in the token price. The market might give 2%, or it could give 5%, but it would carry the same trajectory.
After all, it is capturing the value generated especially from technological advancement.
Network-State
This is not going to happen at the government level.
Disruption does not occur from within. There are too many stakeholders who have an interest in maintaining the status quo. This starts with all the politicians and bureaucrats that benefit from the present process.
Hence, anything of this nature is going to occur from private development. It will not be based upon a nation (geography) but, rather, a network.
The digital realm is going to be the centerpiece.
From here, the economic productivity can start to be pulled away. When we see what is happening with AI, we are made aware of how it does not care about location.
The US Government could quickly usurp much of the crypto world. Instead, it will fight it, trying to operate within the parameters it is familiar with.
Ultimately, disruption is coming to governments. While I would not put them at the top of the list right now, I do think, by middle of this century, we see new governance structures emerging.
By that time, we will see networks as a more central part of the economic and societal structures we operate within.